Money Talks: Shipyard Prepares For Contract Negotiations

January 21, 1991|By DONALD LOEPP Staff Writer,

NEWPORT NEWS — After almost 3 1/2 years of listening to grumbling from unhappy union members about their last contract, Russell N. Axsom is once again preparing for contract talks with Newport News Shipbuilding.

The last contract, although approved by a 2-1 margin by members of Local 8888 of the United Steelworkers of America, has proven to be unpopular, largely because it included only one raise - 3 percent - plus two lump-sum bonuses.

``The fact is, we've had a lot of our members complain. They say they don't want bonuses this time,'' said Axsom, president of the local and a member of the negotiating committee for the 1987 contract.

Although the company's long-term future is still cloudy, because the impact of potential cuts to the Navy's submarine and aircraft carrier programs is still unknown, the union believes it is in a good position to win better raises in 1991.

Newport News Shipbuilding, on the other hand, can be expected to fight to keep its labor costs competitive with other shipyards, especially as competition intensifies for a dwindling number of Navy contracts, plus any revival in commercial shipbuilding work.

``We want to be competitive with other people. We'll be fighting for new orders,'' Edward J. Campbell, the company's president and chief executive officer, said in December.

Company and union negotiators are expected to begin contract talks sometime in the next two weeks. The existing contract, which took effect on June 1, 1987, runs through March 31.

Neither side in the talks expects a strike.

The last strike at the shipyard, a 13-week walkout by the Steelworkers in 1979, turned violent when strikers were accused of assaulting workers. Police and state troopers responded by clearing Washington Avenue and storming the union headquarters, arresting more than 70 people.

``We've had very satisfactory labor relations with the union and membership, at least in our opinion, since the end of the strike in 1979,'' Campbell said.

Although the prospect for Pentagon cutbacks is looming large in the shipyard's future, Axsom believes the union holds a stronger position at the bargaining table today than it did in 1987, near the end of the Reagan military buildup.

Contract talks in 1987 began less than six months after a layoff of 1,250 workers. The company's backlog of Navy work was shrinking, and the yard had recently been underbid on contracts to build four nuclear attack submarines and to construct a new generation of amphibious assault ships.

The yard was also preparing a proposal to build Trident missile submarines, a bid it lost to the Electric Boat Division of General Dynamics Corp.

The company came to the table asking for concessions from the union - one of the largest union locals in the Virginia. According to union officials, the shipyard proposed a $2 an hour pay cut and the creation of a two-tiered wage scale.

In the end, the union managed to avoid give-backs. But the new contract provided for only one 3 percent increase, effective Feb. 5, 1990, and lump-sum bonuses of $1,000 in 1987 and $800 in 1988.

Workers have complained that the bonuses weren't as large as they expected, because they were subject to state and federal taxes.

Axsom said the idea of substituting bonuses for wage scale increases was new for the union, and leaders did not realize that the concept would lose favor among members.

``Most people usually take a bonus and buy an item that they need or want, like a newer car, and then it's gone,'' Axsom said. ``If you get a percentage increase, it stays with you from paycheck to paycheck.''

Axsom said the company seemed to be in better financial health today than it was in 1987. The yard has a backlog of three aircraft carriers and 11 attack submarines, and Campbell said last month that he anticipated no layoffs through 1993.

``My outlook for the yard is very good through 1993, because of our backlog and what we think will come along in the next year,'' Campbell said.

Although the company's operating income - recorded before taxes and interest - has slumped since the last contract was signed, Axsom said the union members feel that they deserve a bigger share of the company's profits.

``We want to share in that to the extent that we feel responsible for the company's success,'' Axsom said. ``In our last contract we did not share, in our opinion, in the profits of this company.''

According to Houston-based Tenneco Inc., the shipyard's parent company, operating income for Newport News has averaged $183 million over the past three years, compared with an average of $250 million from 1984 to 1986, the pinnacle of the Reagan military buildup.